Louisiana Gov. John Bel Edwards recently signed a NAIFA-supported misclassification of workers bill into law. The bill, SB 244, outlines a 12-point definition for “independent contractor” developed by the Louisiana Association of Business and Industry which classifies an independent contractor as anyone who can meet seven of the 12 points. According to the new law, independent contractors could include workers who can’t set their hours, are not allowed to work for other businesses, and are directly managed or supervised by the contracting party.
NAIFA-LA was diligent in ensuring that insurance producers and financial advisers would not inadvertently be unable to meet the seven-point requirements to be considered independent contractors. Though the bill sponsor assured NAIFA-LA that the legislation intended to exclude the financial industry, NAIFA-LA along with the American Council of Life Insurers, helped secure inclusion of language to explicitly exempt insurance producers and financial advisers.
The exemption in the bill states:
"Section 2. The provisions of this Act shall not apply to any person or organization licensed by the Louisiana Department of Insurance, any securities broker-dealer, or any investment adviser or its agents and representatives who are registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed by this state."
NAIFA members are professionals who generally operate their small businesses. An ongoing survey of members indicates that they oppose attempts to reclassify them as employees. Early results indicate:
- Approximately 90% receive income reported on a 1099.
- 94% do not want to be treated as an employee for union organizing.
- 95% operating as an independent contractor want to remain so.
The top concerns of members should they be reclassified as employees include:
- Loss of business deductions.
- Loss of ability to set one’s own schedule.
- Loss of renewal income if current clients were reassigned.
- Nullification of existing agent contracts.
- Diminished product offerings due to inability to offer products outside of a primary carrier.
“Insurance and financial advisors have a long history of successfully working as independent contractors with insurance carriers and financial firms to serve the financial services needs of consumers,” said NAIFA CEO Kevin Mayeux.